There is a substantial risk of loss associated with trading Derivatives . Losses can and will occur. My methods will not ensure profits

Friday, September 20, 2013

20092013

Nifty opened just below PDC. First candle was a MC . It acted as IR. Market was expecting too much from the new RBI governor.and got sold immediately after announcement BOF of IRH/PDC gave a short signal. Short below IRL. TP on gap closure. BOF of LOD gave another trade. TP at BRN 6000. did not attempt any other trade.

In reality it was not a signal based trade at all even though there were signals to go short.It was taking advantage of the panic of positional longs in the marketAfter the gap up and run the previous day, market was very vulnerable. It was waiting for the RBI announcement. Market was expecting too much from RBI and discounted it much earlier. Now there are three possibilities with respect to the announcement.1.Below expectation- sell off2.As per expectation-Profit booking3.Exceeds expectation-Further Rally

Probability of a sell off was much much more than a rally.We are betting on the order flow of higher time frame players who never care about Our DPs

Finally what was the risk ? If it bounces back to the range exit quickly with less than 10 points loss.We must learn to act fast

For example think about the people who have gone long on the break of IRH. Market gave them 3 minutes to correct their mistake, trading inside the range before the sell off I will bet 99% of them did not exit and got trapped suffering 100+ point loss

How do you avoid the fake breakouts? In what cases you decide to take the breakout of IRH and sometimes, you decide to play BPB after the IRH breakout? Else, I end up entering these fake breakouts and lose money. Looking forward to your guidance!

I do not keep track of news during trading hours. But I keep track of major announcements and avoid a positionI do not have historical charts. If you are an Icharts subscriber , you can view it

I rarely trade direct breakouts of levels. I prefer BOF and BPB. Many factors contribute to the success of breakout some are1.Market bias favourable2.Accumulation of stops at the level3.BOf at the other end trapping traders4.other factors like space, order flow, critical mass, risk, etc